With the UK Government having started their summer holidays, like many an unpopular school teacher, it left in its wake a pile of holiday homework for the recruitment industry.
Recruitment law tends always to arrive in feast or famine – a fallow period followed by a rush. And so it is at present, with the Finance Act 2025/2026 and the Employment Rights Bill 2024: a sports day relay race, to get to the finish line first.
The draft Finance Act 2025/2026 contains some critical liability changes for agencies, MSPs and end clients which engage with umbrella companies in the supply chain. It comes into force in April 2026. If enacted as currently drafted, any failure by an umbrella to properly account for PAYE and NICs, will result in the “relevant party” becoming jointly and severally liable with the umbrella for that debt. The “relevant party” will be the recruitment agency in a simple contractual chain (client to agency to umbrella to worker). Where there is no recruitment agency involved, the client will be the relevant party. And where there is an MSP or a chain of agencies in the supply chain, it will be the top agency in the contractual chain that acquires this liability. There will be no statutory defence to a breach and therefore due diligence to ensure you are dealing with a reputable umbrella will be critical to supply chain confidence and compliance, whether you’re an agency, MSP or client. And so the starting gun is fired on reviewing umbrella ASLs and PSLs, asking how you can truly be sure of compliance and getting into discussions about whether Ltd company contractors are in fact now a less risky option?
The Employment Rights Bill rushed into view within the first 100 days of the current Government’s election last year. We initially thought we’d be prepping for much of this law coming into force in 2025, but we’re now looking at an autumn and winter period full of consultations on the details, including on guaranteed hours for zero hours workers, fire and hire, rights for pregnant workers, bereavement leave, collective redundancy, flexible working and changes to trade union law.
Time to lay down on a sun lounger? Not a chance….
Get in touch or stay tuned for further information on how this will affect your business.
Author: Dawn Ford, Head of Legal, Risk and Compliance. Click here for Dawn’s bio.